Under an employer-organized carpooling program, an employee driving another to work receives a 50% reimbursement of properly documented and certified gasoline expenses – or of 100% if two or more other employees are driven. Are the gasoline reimbursements taxable benefits and, if so, how should it be allocated? CRA responded:
[T]he portion of the reimbursement amount that relates to personal expenses of the employees will constitute a taxable benefit to such employees pursuant to paragraph 6(1)(a). Normally, the amount of the taxable benefit should be included in the income of the employee who received the reimbursement. However, the CRA accepts that the amount of that taxable benefit is to be reasonably allocated between the employee who used his or her automobile and the employees who received the transportation. In each situation, the employer and employees should agree among themselves to make a reasonable allocation.